On May 19, 2018, President of the Philippines Rodrigo Roa Duterte, accompanied by other government officials, visited the Alegria oilfield in Cebu and kicked off the commencement of oil and gas production in a ceremony. After being briefed about the development update in Service Contract 49 (SC49) area, President Duterte fully recognized the results that SC49 has accomplished; consequently, he encouraged the operator, China International Mining Petroleum Company Limited (CIMP), to further expand the oilfields in a bid to make greater contributions to the energy development in the Philippines.

In May, 2009, CIMP acquired the interests of SC49 from Ranhill Holdings Berhad, a Malaysian company, the agreement was later approved by the Department of Energy (DOE) on 1st of September that year. Ever since, CIMP went through nearly 10 years of arduous work, and finally made a major breakthrough in SC49 to discover the hydrocarbon-bearing structure in Alegria anticline and the oil and gas production are in commercial quantity. Now the Alegria Field officially entered its first stage of commercial production. This is an important milestone for the oil and gas exploration and development in SC49, marking a new step forward for the oil and gas exploration and development in the Visayan Basin.

The Visayan Basin is rich in oil and gas. SC49 at the south rim of Visayan Basin is adjacent to a hydrocarbon source kitchen which is matured for both oil and gas generation and accumulation. Exploration dates back to 1896, when an American oil company already started its search for oil and gas in Cebu and drilled Toledo 1 and 2 Wells. Ever since after more than 100 years numerous oil companies had strived hard one after the other in their own exploration efforts in South Cebu with about 40 wells drilled but failed. They failed to successfully bring the hydrocarbon to commercial production. When CIMP took over SC49 in 2009, we used an innovative way of thinking and employed new methods in our subsurface exploration, continually validate the geological model, carefully studied migration pathways from the matured source kitchen to the trap and most especially did dry well analysis and made full use of the lessons learned from previous efforts. In summary, CIMP came in with a fresh outlook and backed by experiences. We tried our best to mitigate the subsurface geological risks and optimize the drilling, testing and production operations to overcome the complexities and gradually get to know the geological “regularities” in Alegria area and the migration pathways. Now, we have garnered a major breakthrough. In the future, CIMP will continuously study the geological condition in this area and upgrade its drilling and production techniques. Hopefully, with additional seismic data we can see the upside of the Alegria field and add a brand new chapter to the oil and gas industry of the Philippines.

At present, CIMP has drilled 6 wells in SC49 (P1, P2, P3, P6, P8 and P9); and each obtained commercial capacity of oil and gas production. Of which, 4 wells are oil well (P1, P3, P8 and P9), estimated to produce 150-240 barrels of oil per day with 9,000-14,000 m3 of gas per day from well tests. Two wells are gas well (P2 and P6) - The P2 Well obtained high gas flow, with an estimated stable production rate at over 80,000m3 per day. The P6 Well was estimated to have 21,000 m3 of gas per day.

The newly drilled Polyard-9 Well has great geological and commercial significance. It is now being tested and will later be turned into a production well. This well indicates that the western flank of the Alegria anticline is petroliferous and is a relatively complete hydrocarbon-bearing structure to trap oil and gas. It laid a solid geological foundation for the oil and gas reserves to benefit the first stage of oil and gas development and production in Alegria Field and furnished a theoretical and technological example for petroleum exploration in other regions of the Philippines. All these will bring tremendous changes to the oil and gas geological studies throughout Cebu.

  CIMP also has great confidence in the future development of the Philippines and will expand its investment in the country. CIMP is planning to drill 16 production wells in two years and the crude oil production is expected to reach more than 2,000 bbls per day. Moreover, CIMP is also planning to set up a gas-fired power plant for its gas-to-power project hoping to make continued contributions to the energy industry of the Philippines.

CIMP has taken its roots in the Philippines for many years and we deeply feel that the Philippines is a blessed by God not only in rich natural resources, but with friendly and kind people. CIMP vows to operate strictly in compliance with the laws and regulations of the Philippines, putting great importance in protecting and maximizing the benefits of the local residents and communities, create more job opportunities, support the local government to improve the well-being, education and medication of its people and help the Philippines train more experts in the oil and gas industry and most especially contribute to nation building.

The visit of Mr. President Duterte and his government officials to our field operations here at Alegria, along with CIMP’s success in turning oil exploration into oil and gas production, would undoubtedly attract more investors from all over the world to make investment in the energy industry of the Philippines. It will greatly boost the development and self-sufficiency of the energy industry in the Philippines.

Dated: May 20th, 2018